Bitcoin

Why Dogecoin jumped 25% immediately after Elon Musk mentioned it on Twitter

The price of Dogecoin (DOGE) rose about 25% on December 20 when Elon Musk, CEO of Tesla again drew attention to the meme-inspired cryptocurrency.

Elon Musk and his enthusiasm for Dogecoin is a long-running meme. From time to time, Musk enjoys tweeting about Bitcoin (BTC) and the cryptocurrency market. When it does, the market is quite aggressive.

Musk last tweeted about Dogecoin in July 2020 when he said he envisioned a “standard future for Dogecoin”. At this point, DOGE was up 14%.

Why Dogecoin jumped 25% immediately after Elon Musk mentioned it on Twitter
Why Dogecoin jumped 25% immediately after Elon Musk mentioned it on Twitter

The reason for the Dogecoin surge in Musk tweets is pretty simple. As To explain Cryptocurrency researcher Hasu: “The prices in this area are determined by the attention.” So, When the attention increases significantly, the small capitalization cryptocurrency can soar quickly.

One-hour price chart for Dogecoin (Binance). Source: TradingView.com

Dogecoin trend on Twitter

On December 20, Musk began tweeting about Bitcoin and posting multiple tweets about the dominant cryptocurrency.

Bitcoin is my safe word

In the middle of it all, Musk tweeted “One word: Doge”, which caused a sensation on Twitter. Dogecoin began to trend the platform, especially when Musk changed his biography to “Former Dogecoin CEO”..

According to data from CoinMarketCap, Dogecoin has a market capitalization of around $ 549 million. Compared to major cryptocurrencies such as Bitcoin, Ether (ETH) and large decentralized financial tokens (DeFi), DOGE’s rating is much lower.

According to Coinmarketcap, Bitcoin’s market capitalization is currently $ 441,262,403,855.

Since DOGE is only the 44th largest cryptocurrency in the world, The volume and liquidity are lower than the major cryptocurrencies.

So, Often times, when an influential figure like Musk talks about DOGE, the price of the cryptocurrency goes up as trading activity suddenly spikes.and.

In November, other large altcoins showed a similar trend. For example, as Cointelegraph reported, XRP skyrocketed when Bitcoin started rising up to $ 19,000. It was above $ 0.90 on Coinbase and $ 0.75 on other major exchanges.

What does the rise of DOGE mean?

Technical analysts and traders point this out The rise of DOGE has led to the start of altcoin cycles in the past. A trader whose pseudonym is known as “Crypto Capo” said::

“Every altcoin season starts pumping $ DOGE.”

The likelihood of an altcoin season starting remains high as Bitcoin faces huge resistance at $ 25,000 based on the data in the exchange’s order book.

The trader also indicated that Bitcoin is likely to hit $ 25,000 first, drop to $ 21,000 to regain support, and taper to $ 30,000.. The dealer said What:

“Possible roadmap for BTC: $ 25,000, then $ 21,000 to $ 22,000, then $ 30,000 and buy the dips.”

If a similar scenario occurs, altcoins would likely be the biggest beneficiaries. Traders would look to riskier games to offset the decline in volatility in the Bitcoin market.

The combination of these factors suggests that DOGE’s rally could usher in a new altcoin cycle for the foreseeable future..

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